Why trading small accounts is not worth it

@Ihlas Thanks for sharing, and i don’t know that to say. Good luck with that !

This is way too much risk and will not be sustainable. Realistically, you will blow this account soon I’m sorry to say.

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I can show you the results. 4 loses out of 150 trades. Leverage 1:200. My aim is to check my trading strategy. This 4 loses were made accidentally. So I try to be more careful. And trying to find weakness in the strategy so I could fix it up.

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I believe you. Don’t get me wrong I hope you succeed, but you need to be realistic. Demo accounts are completely different than live accounts. I recommend opening a small live account and make that work first before buying that Porsche :wink:

@mario.forex I hope I didn’t give a false impression that I’m profitable yet; only had a strategy breakthrough in the last couple of weeks.

The short answer is yes, I do expect the account will someday become large, primarily through growth. Currently I risk 0.5% per trade. As I come to understand my trade strategy performance, I will adjust this to optimize for growth.

What do you saying that it is different from the real one? I think the only difference is psychology. I can do it.

No, why develop a strategy that works just to switch it? That makes no sense.

You develop a strategy, stick to it and work to ‘perfect’ it. Period.

With a small account you are just working with smaller numbers, but your percentages don’t change.

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@MattyMoney I totally understand what you are trying to say. Let us answer the following question. if we risk 5% on one single trade on a small account, can we risk the same amount on a bigger account ? Below is what I am trading to share in two different scenarios.

  1. Scenario 1 : trading small accounts, with a broker that allow us to trade with less than 1,000 units lot size but without lot of leverage, using a certain trading plan in which we will be able manage the risk, diversify, etc. The purpose is to test a trading plan on live small account in order to switch to bigger account if the plan works
  2. Scenario 2 : trading small accounts, with a broker that allow us to trade with at least 1,000 units lot size but with more leverage, using a certain trading plan in which we will not be able to manage the risk, or to diversify, etc. The purpose is to trade live small accounts in the hope of increasing dramatically our account and once we’ve increased it to a certain level we can switch to another trading plan.

One thing to mention. I never use stop loss. You can watch on YouTube.
Title: FOREX CHALLENGE | From 500$ into 100000$ in 2 months (13-day result) DEMO ACCOUNT. Would be glad to hear your ideas.

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Demo accounts, depending on the broker are generally designed to work in your favour. Sometimes they are set on a loop, some don’t reflect the spread. A live trade always starts out in the negative due to the spread cost.

As for the psychology part, it’s easy to open up a large position in a demo account, go to bed and sleep knowing that if your trade goes against you it’s not really going to impact your life.

But the reality is, if you open up a large position using a live account, that position goes against you during the day, suddenly you find your account -$2k in DD. Will you be able to sleep that night? And if you do happen to get to sleep, you’re going to wake up terrified at the though of looking at your account. Now it’s at -$4K overnight because you have no SL of risk management.

Trust me, it will happen and it’s no fun at all. The only choices you have at that point are close it, accept the loss and chalk it up to cost of business, or leave it and hope it turns around.

I have been here. I have learned the hard way, and I wouldn’t wish it on anyone.

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you should only start with that much once you have a solid system, start small to see how you deal with money management

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That’s why I opened small demo account: 500 USD. As if it was real :slight_smile: And I do trades that can be closed withing max 2 hours. I thing trading within the zone is most vital part of the day trading.

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I understand what you say about SL of risk management. Feel the market with indicators, analyze different timeframes, give the market time move in your favour.
BE PATIENT WHILE ANALYZING. ACT QUICKLY. :grinning:

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you can argue that the stress level with small account should make you better with large account

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It is not about stress. It is all about profitable strategy that works. Being confident with your strategy extinguishes your fear :muscle:
4 loses out of 150. I think very good. Even in demo account. I will test my strategy more weeks.

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Can’t argue with that. Maybe you can share your strategy sometime.

***Edit - you did mention your strategy previously.

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Small accounts usually have a lot of problems to follow money management and risk rewards. There are many who want to make a lot of profit with a small account which is never possible. Positive thinking when it comes to raising a small account.

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***Edit - you did mention your strategy previously.

Which was???

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Barring a change in market conditions adversely impacting strategy performance, I see no compelling reason to decelerate growth just because the dollar amount being risked is bigger. In trading it should be no more disturbing to lose $25,000 than it is to lose $25. Whether your balance is $500 or $500,000 — 5% is 5%.

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Yes that’s true. 5% of your capital is 5%, and you have a higher risk that big money pro traders seek to avoid, or they would at least hedge or combine the trade with non-correlated pairs to lower the risk.

Bear in mind 5% is only a 20 losing steps away from going broke - and the message is to stay in the game at all costs while riskier traders burn out. My biggest losing trade run on one day was 13 - not one pair made a profit, and it taught me a lesson that losses are inevitable as was my drawdown…

IMO, 2% per trade risk is a sensible good trade maximum. That gives a leeway of 50 losing trades.

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